With inflation continuing its downtrend for the fourth week running and industrial output growth touching a 10-year low in August, the need to focus on economic growth as much as on keeping prices stable gained currency in certain quarters of the government.

“There is now scope for reducing interest rates and the cash reserve ratio,” commerce secretary GK Pillai told reporters reacting to the data on inflation and industrial production released today. “It (moderation in inflation) has made it easier for the monetary authority to ease liquidity,” said Ajay Shankar, secretary, department of industrial policy and promotion. “There is scope now for a softer monetary policy.”

The IIP grew a dismal 1.3 per cent in August this year, its lowest since August 1998. IIP growth in August last year was a robust 10.7 per cent. During April-August this year, the growth in industrial production has halved to 4.9 per cent compared with 9.8 per cent during the same period last fiscal.

For the week ending September 27, the inflation rate dropped to 11.8 per cent from the previous week’s 11.99 per cent. The wholesale price index based inflation rate had touched a high of 12.91 per cent for the week-ended August 2.

The core IIP, which measures growth in the six key infrastructure sectors — crude oil, petroleum refinery products, coal, electricity, steel and cement — too saw a sharp decline in growth, growing a mere 2.3 per cent down from a healthy 9.5 per cent in August last year. Each of the six sectors witnessed a slowdown in growth over August last year. In the April-August period, too, all sectors except coal saw a decline in growth compared with the same period last year.

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